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Consumer confidence falls in December

Australian consumers are downbeat heading into Christmas, despite the Reserve Bank of Australia's decision to cut the cash rate to its lowest level in three years.

The Westpac Melbourne Institute Index of Consumer Sentiment for December, released on Wednesday, fell 4.1 points to 100.0 points.

A reading of 100 indicates equal numbers of pessimists and optimists among respondents.

The fall in sentiment will be unwelcome news for retailers hoping for a sales boost in the lead up to Christmas.

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Westpac chief economist Bill Evans said the result was unexpected, following a rise in confidence in November and the rate cut on December 4.

"This is a very surprising result," he said.

"It was reasonable to expect that the index would respond quite

positively to the rate cut the Reserve Bank delivered last week."

The RBA cut the cash rate by a quarter of a percentage point to 3.0 per cent at its December board meeting, its lowest level since 2009.

Mr Evans said confidence had risen among consumers who had a mortgage (up 4.4 per cent), but that was offset by pessimism among other respondents, including those who are renting properties (down 9.1 per cent) and those who wholly own their own home (down 10.9 per cent).

Negativity surrounding local economic conditions, the international economy and the jobs market was weighing on consumers, he said.

The fall in consumer sentiment follows National Australia Bank's monthly business survey showed on Tuesday that business confidence had fallen to its lowest level since April 2009.